Is Wind Really Hawaii’s Low Cost Option?

Wind energy is at the top of the list of energy sources that Hawaii should be tapping to meet its renewable energy goals, according to a recently released federal study.

Why? Because it’s cheap, says the 240-page study done for the National Renewable Energy Laboratory by Booz Allen Hamilton.

The report appears to validate state officials and Hawaiian Electric Co.’s emphasis on developing wind energy, including the controversial Big Wind project, which has been touted as the centerpiece of the Hawaii Clean Energy Initiative. The study says that without out it, the state won’t meet its mandate of 70 percent clean energy by 2030.

But the study estimated market prices for wind energy at one-third of what Hawaiian Electric Co. has agreed to pay for the renewable energy source in recently negotiated contracts with wind companies. Meanwhile, solar companies in Hawaii say that the report over-inflates the cost of solar. And that has the solar advocates crying foul.

It evaluated the state’s energy options and weighted them using a variety of metrics. It looked at energy sources including solar photovoltaic, geothermal, biomass, ocean energy, hydro, municipal solid waste and energy efficiency. It created eight different scenarios, and ultimately recommended the one in which wind energy makes up a bulk of Hawaii’s renewable energy portfolio.

Ralph Braccio, the study’s lead author, said the analysis contained in the study, which was conducted from 2008 to 2010, has been used to inform policy debate among key players in the state’s energy sector, which includes officials from the electric utilities and state energy office.

The report notes that “since that time other analyses and options have been considered and are still to be further evaluated in the future.” And indeed, in the midst of controversy over the Big Wind project, lawmakers and energy officials have begun looking more toward geothermal and wind development on Maui and the Big Island that could be transported to Oahu. The study didn’t evaluate these options.

Cost was one of the top three variables that the study took into account when evaluating the best renewable energy options for Hawaii. The other factors were technical risk and price volatility. Imported biofuels, for instance, were considered to be a greater risk because of fluctuating prices.

Solar energy, in particular, was ranked lower based on this metric. The study noted that “rooftop solar carries one of the highest costs.”

Wind Energy Pricing Doesn’t Hold-Up

The study presumed the cost of wind energy to be 6 cents to 8 cents per kilowatt hour in Hawaii, based on 2007 data from the California Public Utilities Commission. Braccio said data specific to Hawaii was unavailable. (Until recently, the prices of wind farms in Hawaii have been tied to the price of oil.)

However, Hawaii residents have been paying three times that much for wind energy generated by the Kahuku wind farm on Oahu. And they’ll be paying triple that once the Kaheawa II and Auwahi wind farms on Maui go online, as well as the Kawailoa wind farm planned for Oahu’s North Shore. The contracts are priced between 20 cents to 23 cents per kilowatt hour.

Braccio said that the study was not intended to evaluate the cost of the energy sources for the consumer and that while wind prices might be higher than the assumptions, the relative ranking of the resources likely holds up.

“This was not designed to be project specific,” he said. “But if you look at the numbers, solar was probably more expensive than wind — I bet it was. Look at (contracts) in Hawaii for solar and wind. Solar is more expensive than wind. The relative ranking is still the same.”

Studies of mainland prices indicate that wind energy tends to be significantly cheaper than solar, though prices for photovoltaic panels have dropped recently. But this hasn’t been the case in Hawaii.

State regulators recently approved a contract between IC Sunshine and Hawaiian Electric Co. for a solar farm that will be located on a 20-acre parcel in Oahu’s Campbell Industrial Park. The average rate over 20 years is 23 cents a kwh.

And HECO will be purchasing solar power from SunPower Corp. for its Kalealoa solar project at an average rate of about 22 cents a kwh. The report presumed industrial solar to range in price from 20 cents to 28 cents per kilowatt hour.

But Mark Duda, an executive at local solar company, RevoluSun, and the former head of the Hawaii Solar Energy Association, said that the cost assumptions for solar energy that the report used were way off, particularly when it came to rooftop solar. Booz Allen estimated it to be between 47 cents and 71 cents a kilowatt hour.

“These costs appear to exceed actual costs in Hawaii dramatically,” said Duda. “To the extent the PV costs per kwh had an impact on the study’s conclusions, then I would have significant concerns about those conclusions.”

He said that costs for residential rooftop solar, not taking into account financing, averaged about 14 cents a kilowatt hour. Larger commercial systems averaged 9 cents per kwh, and utility-scale systems, 12 cents per kwh.

Braccio, the lead author, didn’t respond to a question about the solar numbers.

Study Enflames Larger Energy Policy Debates

Henry Curtis, executive director of Life of the Land, who closely tracks energy issues in Hawaii, also questioned the study’s conclusions when it came to wind versus solar. The debate between technologies has taken on increasing urgency in Hawaii with controversial wind farms being proposed for the islands of Lanai and Molokai. All of the energy would be brought to Oahu via undersea cables and opponents have argued that Oahu should focus on its solar energy sources, instead of looking to the neighbor islands.

“The report was written for one reason and one reason only — to show how this cable (and Big Wind) is the only way to go,” said Curtis.

The study said that without the Big Wind project, Hawaii would not be able to achieve its goal of 70 percent clean energy by 2030, which includes energy efficiency and renewable energy goals.

“Those scenarios that met or approached the 70% goal all rely on high-efficiency levels and heavy use of wind power, made possible by an undersea transmission cable connecting wind generation on Lanai and Molokai to Oahu,” according to the report.

Ken Kelly, a senior policy official for the Hawaii Clean Energy Initiative for NREL, said that the report was based on analysis conducted during 2008 to 2010.

“I think the report is a document of what we did, and I would say that allowed us to establish a pathway forward,” said Kelly.

He said the work acknowledged that technology and the marketplace would evolve and “we would have to continually look at the evaluation and continue to update the approach and the strategy.”

Data

The following charts are taken from Booz Allen Hamilton’s [report]((http://www.nrel.gov/docs/fy12osti/52442.pdf):

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